US Expat Taxes in Bermuda

The Bermuda Tax System

Bermuda introduced corporate income tax with effect from January 1, 2025. Review the Corporate Income Tax Agency’s current scope rules separately from your personal filing obligations; do not assume a business is exempt merely because it operates in Bermuda. Other local taxes and duties to review include:

• Payroll tax: Bermuda taxes business remuneration paid by employers, self-employed persons and deemed employees, subject to exemptions. Taxable remuneration includes wages and benefits in cash or kind. The calculation has employer and employee portions; use the Office of the Tax Commissioner’s schedule for the applicable period rather than a single approximate rate.
• Customs duties: Import duties may apply to goods brought into Bermuda; check the applicable goods, rate and exemption.
• Land tax: Assessed using annual rental value; review the rules for the property and your interest in it.
• Stamp duties: On certain transactions and documents.

Bermuda’s government guidance states that individuals do not pay personal income tax, but payroll tax and other local obligations may still apply. PwC’s Bermuda individual-tax summary, reviewed February 19, 2026, states that Bermuda has no VAT or sales tax. The Office of the Tax Commissioner administers payroll tax, land tax and stamp duties; assess relevant duties and filings separately from your US return.

Residency and Work Permits

Check your permission to work in Bermuda under the current immigration policy and the category that applies to you. Standard work permits generally last one to five years; immigration permission is separate from US tax eligibility. For the FEIE, review your foreign tax home and the applicable bona fide residence or physical-presence test. The physical-presence test requires at least 330 full days in a foreign country or countries during a consecutive 12-month period, not simply 330 days outside the US. Time in international waters or airspace does not qualify.

US–Bermuda Treaty Scope

The UN Treaty Collection records a US–Bermuda convention concerning taxation of insurance enterprises and mutual assistance in tax matters, concluded on July 11, 1986 and effective December 2, 1988. Bermuda is not listed on the IRS’s general income-tax-treaty A–Z page. Do not infer personal salary or pension relief from the existence of the insurance convention; identify a provision that covers your specific income before claiming treaty treatment.

No US-Bermuda Totalization Agreement

Bermuda has a Social Insurance system administered under its Contributory Pensions Act. Bermuda is not included in the SSA’s list of US Social Security agreement partners. Review local contribution obligations and US coverage separately. The FEIE does not reduce US self-employment tax; use the applicable Schedule SE rules to calculate any amount due.

Review Exclusions and Credits

Compare relief using your actual income and tax records. FEIE eligibility depends on foreign earned income, a foreign tax home and the applicable residence or presence test. Foreign Tax Credit eligibility depends on qualifying taxes imposed on you and paid or accrued, with a separate credit limit. Residence in Bermuda alone does not answer either question. Taxes on excluded income cannot also generate a credit.

Filing Obligations Summary

Determine your federal return requirement before selecting forms. Form 2555 is relevant when claiming qualifying foreign earned income or housing relief; it is not mandatory for every expatriate. Review FBAR and Form 8938 independently using the conditions below. Fund ownership, pensions, trusts and self-employment may require additional reporting after classification and exception checks. Keep worldwide income, account, travel and plan records for that review.

For help defining the US filing work you need, review our US expat tax preparation services and confirm the forms, fees and responsibility for any Bermuda work before engagement.

Tax Treaty Information

FBAR & FATCA Requirements

A US person generally files an FBAR when they have a financial interest in, or signature or other authority over, foreign financial accounts whose combined value exceeds USD 10,000 at any time during the calendar year. Review all relevant foreign accounts and applicable exceptions, including authority over employer accounts. Whether an account produces taxable income does not determine FBAR reporting. Form 8938 is a separate test. For specified individuals with a foreign tax home who satisfy its presence-abroad test, the thresholds are more than USD 200,000 at year-end or USD 300,000 during the year when unmarried or filing separately; joint filers use USD 400,000 or USD 600,000 respectively. Check asset definitions, filing status and exceptions rather than assuming an overseas address is sufficient. FBAR is filed separately with FinCEN; Form 8938 accompanies the applicable income-tax return. Filing one does not replace the other. A pension or trust arrangement needs its own classification and reporting review; a generic list of account labels cannot resolve every filing obligation.

Foreign Earned Income Exclusion (FEIE)

For tax year 2026, the FEIE maximum is USD 132,900 per qualifying person, limited by eligible earnings and adjusted for partial-year qualification. Report the income on a return to claim it. You need a foreign tax home and an applicable bona fide residence or physical-presence test; moving to Bermuda alone is insufficient. A housing exclusion uses eligible employer-provided amounts; a housing deduction uses self-employment earnings. Qualified expenses are subject to a base amount, location limits and qualifying days. Calculate the housing exclusion before the FEIE. Neither benefit reduces self-employment tax. Dividends, interest, capital gains and pensions are not earned income for this exclusion. Review compensation type, service location and payment timing before deciding eligibility; a bonus or noncash payment is not automatically excluded from consideration. Remaining non-excluded income uses the tax rates that would apply without the exclusion.

Common Tax Issues in Bermuda

• 1Credit Eligibility and Income Above the FEIE. Income beyond the available FEIE is not excluded by that provision. Review other applicable deductions and credits separately. The Foreign Tax Credit is limited by eligible foreign taxes and the applicable US limit; unused eligible taxes may qualify for carryback or carryover treatment.
• 2Employer Pension Plans and US Reporting. Review the pension plan documents before determining its US tax classification or forms. Foreign-trust reporting depends on ownership, transactions and applicable exceptions. IRS guidance provides relief for certain eligible individuals and qualifying tax-favored foreign retirement trusts; it is not a blanket exemption for every Bermuda pension. Review FBAR and Form 8938 separately from any Forms 3520 and 3520-A analysis.
• 3Bermuda-Domiciled Funds as PFICs. Bermuda domicile alone does not establish PFIC status. Review the entity’s US tax classification, ownership and income/assets. The PFIC tests apply to foreign corporations: at least 75% passive gross income or at least 50% passive assets under the applicable measurement rules. Direct and indirect ownership, exceptions and prior elections can affect Form 8621 obligations. A QEF election has eligibility and information requirements; mark-to-market treatment requires qualifying marketable stock. An election made later may not remove earlier PFIC consequences.
• 4Review the Specific Tax Before Claiming a Credit. The IRS generally requires a creditable tax to be imposed on you, paid or accrued, legally owed, and an income tax or tax in lieu of one. A payroll deduction label alone does not resolve these tests. Review the relevant Bermuda levy and US rules before claiming a credit; this guide does not determine the employee payroll-tax portion’s creditability.
• 5Economic Substance Requirements. Bermuda company declarations include whether the company carries on a relevant activity for economic substance purposes. Review the company’s applicable obligations using its records and current government guidance; CITA publishes economic substance legislation, guidance and declaration deadlines. This company-level analysis does not establish an employee’s eligibility for the US foreign earned income exclusion: the individual must separately meet the IRS foreign-tax-home and residence or physical-presence requirements.
• 6Equity Compensation and Stock Options. Stock options, restricted stock units and other awards need an award-specific review. IRS guidance distinguishes statutory from nonstatutory options, with different income timing and possible alternative minimum tax for incentive stock options. Bring grant documents and exercise, settlement and sale records. Assess any foreign-earned-income exclusion separately against its service-income, timing and residence requirements; the date of an exclusion election alone does not resolve an award’s treatment. Do not infer Bermuda payroll-tax treatment or foreign-tax-credit eligibility from the award’s label.
• 7Social Insurance and US Self-Employment Tax. Bermuda administers Social Insurance contributions and benefits. Separately, US self-employment tax can apply to covered earnings, and the FEIE does not reduce it. Calculate the liability under Schedule SE using the applicable Social Security earnings limit and Medicare rules; do not estimate it by multiplying all business income by one rate.
• 8State Tax Residency. Review your former state’s residence and source-income rules separately from federal overseas relief. For example, New York distinguishes domicile from statutory residence based on a maintained home and days present. It also provides exceptions for certain New York domiciliaries, including a foreign-presence rule with additional family-presence and partial-year limits. Moving to Bermuda alone does not settle the result; retain housing, travel and domicile records and check every condition of the applicable rule.

Sources checked September 24, 2026

• us citizens and residents abroad filing requirements
• foreign earned income exclusion
• foreign account tax compliance act fatca
• Bermuda corporate income tax commencement
• Bermuda Corporate Income Tax Agency
• payroll tax
• SSA international agreement partners
• social insurance
• self employment tax social security and medicare taxes
• UN record: US–Bermuda insurance convention
• united states income tax treaties a to z
• foreign tax credit
• foreign tax credit how to figure the credit
• bermuda work permit policy 2026 what you need to know
• IRS Form 8621 instructions
• comparison of form 8938 and fbar requirements
• office tax commissioner
• other taxes
• types taxes bermuda
• US–Bermuda FATCA agreement
• report of foreign bank and financial accounts fbar
• IRS Form 8938 instructions
• figuring the foreign earned income exclusion
• foreign housing exclusion or deduction
• foreign earned income exclusion what is foreign earned income
• foreign taxes that qualify for the foreign tax credit
• foreign trust reporting requirements and tax consequences
• IRS Revenue Procedure 2020-17: eligible foreign trusts
• IRS Topic 427: stock options
• New York income-tax residency definitions
• limited companies
• economic substance
• us citizens and resident aliens abroad automatic 2 month extension of time to file
• us citizens and resident aliens abroad automatic 6 month extension of time to file
• tax administration
• capital gains tax cgt rates

Local Resources

Frequently Asked Questions: US Taxes in Bermuda

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